Power of Attorney documents are a well-known component of estate planning, usually associated with assigning decision making roles for end of life planning and instances when someone is otherwise incapable of caring for themselves.
However, the power granted in a power of attorney is not limitless.
Power of attorney documents can be as broad or as limited as the grantor sees fit. Although many power of attorney documents have provisions regarding real estate transactions, it is possible to restrict the power of attorney documents to that extent as well. A real estate power of attorney grants many of the same fiduciary responsibilities, but is simply limited to real estate transactions or decisions.
In fact, there are many situations where a power of attorney only needs to extend as far as real estate transactions. For example, many real estate transactions require the title owner to be present during the listing or sale of their property. Being absent from real estate transactions can present several logistical obstacles that a power of attorney may be able to overcome.
Someone traveling abroad, serving in the military, or impaired by way of an accident or illness may need temporary assistance in completing their real estate transactions. A trusted individual with a real estate power of attorney may be able to pay rent or a mortgage, sign a lease, or make a decision regarding potential tenants.
The person who holds a power of attorney is essentially the legal replica of the principal. This is the reason why powers of attorney of any type, real estate or otherwise, should only be granted to someone with the implicit trust of the principal. People often name family members or close friends.
It is possible to limit powers as necessary when granting someone the power of attorney. Real estate transactions are just one limitation from which the grantor may choose.
For more information on creating a power of attorney, please contact the estate planning attorneys at Bodie.